Pre-emptive Measures Required Against More Rigid and Continuous US Import Restrictions

2018-01-15

Pre-emptive
Measures Required Against More Rigid and Continuous US Import Restrictions

-Guidelines to avoid the application of
the US AFA (adverse facts available) -

Since the inauguration
of President Trump this year, the further strengthened anti-dumping measures
has not only increased the number of measures but also continued the trends of
the high anti-dumping duties. It adds difficulties to Korean exports to the
United States. In particular, the US Department of Commerce is increasingly
imposing high rates of anti-dumping duties utilizing the AFA clause *.
Therefore, it is urgent for Korean companies to work on risk management as well
as countermeasures as this trend is expected to continue next year.

* AFA (adverse facts available): Provision of
evidence that allows judgment based on adverse inference when the import
regulatory investigation authority determines that the subject entity is
uncooperative in the investigation

According
to the Import Regulation Support Center of the Korea International Trade
Association (Chairman, Kim Young-joo), the U.S. has launched 54 new
anti-dumping investigations this year, the largest number in the last 10 years,
and six of them are Korean companies. In addition, the number of companies that
the U.S. applied the AFA in the process of antidumping investigations was only
one digit before 2013, but it increased to 23 in 2014. It appeared that the AFA
was applied to 40 companies by the end of November this year. When the AFA is
applied, a fairly high dumping margin rate is calculated. The average dumping
margin rate of the companies that were not subject to apply AFA this year was
10.3percent, while the average dumping margin rate of the AFA applied companies
exceeded 100 percent.

When high
rates of anti-dumping duties are levied, the companies are required to give up
exports in the worst cases. Considering these economic losses, it is pointed
out that the most important thing is to be prepared thoroughly to minimize the
dumping rates without having AFA applied at the time of investigation.
Therefore, Korean companies need to be well aware of the typical cases that the
United States applies the AFA and be prepared for them before the antidumping
investigations are initiated.

The report
titled "The US AFA Applied Cases and Countermeasures" published by
the Korea International Trade Association’s Import Regulation Support Center
The report introduces specific details of each of the five cases by analyzing
the domestic and foreign cases that the US Department of Commerce applied the
AFA from 2016 to the present, and provides guidelines for Korean companies to
be aware of. According to the report, it is essential to understand the
investigation practices of the Department of Commerce, and it is necessary to
understand that the recent investigation practice of the Department of Commerce
has been very rigid. Therefore, it is important for Korean companies to
cooperate upon the Department of Commerce's request as much as possible without
any mistakes and to be prepared in advance for the possibility of excessive
information request.

Lee
Mi-hyun, head of International Trade Cooperation, stressed “Since
self-initiated investigation of the U.S. Department of Commerce has been
revived, it is expected that the United States will not only increase the
number of import restrictions but also expand the scope of items next year.
Therefore, it is important to make sure to minimize dumping rates without having
the AFA applied.”